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Research Seminar: The Day that WTI Died: Asset Prices and Firm Production Decisions

Research Seminar: The Day that WTI Died: Asset Prices and Firm Production Decisions

Nazarbayev University Graduate School of Business invites you to the Research Seminar titled "The Day that WTI Died: Asset Prices and Firm Production Decisions" 

Abstract

On April 20, 2020 the flagship North American benchmark price for crude oil, West Texas Intermediate (WTI) for delivery in Cushing, OK, went negative for the first time in history, settling at -$37/bbl. We document that this event had a widespread effect on physical purchase contracts throughout the United States, despite ample storage
capacity at many locations. We show that firms with crude purchase contracts indexed to WTI shut in production after this event at greater rates than those that did not. The difference in behavior is strongest among high productivity wells and occurs despite an overall improvement in pricing and crude market fundamentals after the April 20th
event. Our evidence suggests that benchmark prices have important implications for the real actions of firms due to their importance as price setting mechanisms in contracting.

Time: 7 pm


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Date:

Wednesday, October 06, 2021

Time:

19:00

Location:

ZOOM

Speaker

Jerome Taillard

Associate Professor

Jerome Taillard is an Associate Professor at Babson College. He earned his PhD in Finance from The Ohio State University in 2010. Professor Taillard has been recognized for teaching excellence with business-school wide teaching awards at both Boston College and Babson College. He was voted Best 40 Under 40 and Best Professor the Class of 2019 by Poets and Quants and taught at the Wharton School in 2018. His main research interests are in corporate finance, specifically in the areas of risk management, energy finance, innovation, and governance. He has published his research in the Journal of Finance, Review of Financial Studies, Journal of Financial Economics, and Management Science. He received the prestigious Michael Brennan Award for Best Paper published in the Review of Financial Studies in 2017.